El Salvador's military government has authorized the repeal of a 16-month-old "public order" law, ostensibly designed to combat leftist terrorism, that international and Salvadorean human rights groups have labeled an instrument of repression.

Legislation repealing the Law for the Defense and Guarantee of the Public Order, which gave the government nearly carte blanche arrest and detention powers for any act it deemed contrary to national interest, was turned over to the rubber-stamp congress Monday by President CarIos Humberto Romero Mena.

It is expected to be quickly approved and, according to Salvadorean sources, the law should be off the books next week.

The action follows initiation several months ago of private meetings on the law between El Salvador's Roman Catholic leaders and the opposition Christian Democratic Party on one side, and the wealthy private business sector that has long supported the rightist government on the other.

At the same time, reports highly critical of the law as a repressive mechanism with wide-ranging potential for abuse were published by the Organization of American States and the U.S. State Department.

In a press conference Monday, Gen. Romero described the law as "inefficient" and said he considered its repeal a "national necessity." He asked for all sectors of society to contribute to the fight against terrorism.

Romero said that all prisoners currently held under the law, which he put at 48, would be released. In a report last July, the office of San Salvador's archbishop, a harsh critic of the law who has disputed government figures, said that 715 persons had been arrested under it at that time.

Of those, the archbishop's report said, 590 had been freed, usually after being beaten, two had been assassinated and 21 had disappeared while in the hands of the government.

When the law was promulgated in 1977, the government said it was necessary to combat kidnapings and murders of foreign businessmen and government officials by leftist guerrillas. Despite large number of arrests, the kidnappings and general violence have increased.

Two British and one Japanese businessmen are among the missing current kidnap victims. A Salvadorean businessman who is a leader of the Jewish community and honorary Israeli consul was kidnaped several weeks ago -- reportedly by the leftist National Forces of Armed Resistance, who have asked for $10 million ransom. A Dutch businessman was released following ransom payments earlier this year.